Port Infrastructure: An Access Model for the Essential Facility

Abstract

This paper analyses the main consequences for the seaport efficiency of an access regime recently introduced by the Peruvian regulator for the public transportation infrastructure (OSITRAN). Its objective is to make competition viable for services that use, as input, transport infrastructure controlled by a monopolist. It is based on two theoretical contributions, the ‘Coase theorem’ and the ‘Demsetz approach’, and minimises the government intervention risk. Both port operators and providers of port services now have incentives to negotiate conditions of access, which permit competition, or to compete for an exclusivity right when this is desirable. If the parties do not reach an agreement within a reasonable time, the Regulator can enact an access mandate that may punish any of the parties, creating incentives for them to reach a Nash Equilibrium. The model seems to be generating productive and allocative efficiencies in port services, thus contributing to a potential reduction in Peru's maritime transport costs.

Appendix A: THE PERUVIAN SEAPORT SYSTEM

Peru has seven public seaports, distributed along 2,500 km of coast. The most important is Callao, located in the vicinity of Lima, which in 2001 registered a movement equivalent to 70% of the cargo mobilised at all public seaports. Other important seaports are General San Martín, Matarani and Paita, which jointly mobilised 3.7 million metric tons (MT) (Table A1).

Table a1 Revenues and cargo in Peruvian ports: 2001

Since 1970, the Peruvian seaports have been operated by ENAPU S.A. This is a State-owned company dependent on the Ministry of Transport and Communications. In 1999, the concessioning of seaports began with the concession of the Matarani port to TISUR. Since then, the process has been suspended as a consequence of an adverse political climate to market-oriented reforms.

The public operation of Peruvian seaports has many deficiencies that reduce the competitiveness of Peruvian foreign trade. First, ENAPU has an excessive number of employees, which, at Callao alone, reaches 700 when an adequate number would be between 150 and 200 (see Fourgeaud, 2000). Another problem is that ENAPU is responsible for all of the retirement payments to its former employees, which represents 30% of its annual costs. These problems result in tariffs that are among the highest in the region, as shown by a recent study conducted by OSITRAN (OSITRAN, 2002).

Another negative effect of the public administration is its inability to make the necessary investments to keep up with technological advances. For example, the Port of Callao has neither cranes nor enough depth of water to allow berthing by large ships, despite handling 90% of the country's containerised cargo. It is calculated that the investment needed to modernise the principal Peruvian seaports exceeds US$270 millions (see ADEPSEP, 2002), an amount that the Treasury cannot afford.

Since mid-1980s, ENAPU has not supplied certain services exclusively. This has allowed private firms to increase their share in some port service markets, which, generally, are highly concentrated. For example, 5.5% of maritime agents represent 80% of operations at Callao, while 12% of stevedoring firms represent 70% of the market in Matarani. In other ports, the situation is similar.

Currently, the port service tariffs covers all of their costs, including those that could be covered by an independent access charge. Table A2 shows the access charges that at this moment are covered by the tariffs of wharfage, berthage and towage:

Table a2 Charges of access currently covered by tariffs of seaport services